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LG Chem Michigan to pay government $1.2 million

GRAND RAPIDS, Mich. (AP) -- Electric car battery maker LG Chem Michigan will pay the U.S. government more than $1.2 million to settle allegations that it used federal stimulus money to pay workers who weren't making batteries.

The U.S. Attorney's Office in Grand Rapids, Mich., said Tuesday that the workers watched movies, played games and did volunteer work in 2012 while being paid through a $150 million Department of Energy grant to build and operate a battery factory in Holland, Mich.

They were paid while waiting for the Korean company to move battery production from South Korea to Michigan, according to a statement from the U.S. Attorney's Office.

The government also alleged that company executives failed to fully disclose how many employees were involved.

LG Chem Michigan did not admit liability. The company said in its own statement that it paid the employees in an effort to keep a qualified workforce while awaiting the start of production. It says in a statement that it cooperated with a government investigation.

The company has a contract to make battery cells for the Chevrolet Volt, a plug-in hybrid car that can go about 38 miles on battery power before a small gasoline-powered generator kicks in. Sales of the Volt have been relatively slow, with gas prices falling during the year. Through October, General Motors Co. sold 18,782 Volts in the U.S., down 2.7 percent from last year, according to Autodata Corp. So far this year, all automakers have sold nearly 13 million vehicles in the U.S.

The LG Chem Michigan statement said the Holland plant is now making battery cells and the company is studying the market to get additional business. "Despite the continuing challenges presented by the current market conditions, the company remains fully committed to the success of the lithium battery manufacturing plant," the statement said.

The U.S. Attorney's Office said that the payment announced Tuesday is in addition to the $842,189 that LG Chem Michigan refunded to the Energy Department in January based on the same allegations.

LG Chem Michigan is a unit LG Chem Ltd., part of South Korea's LG Corp. conglomerate.